Pottery Barn 2006 Annual Report Download - page 125

experience, other commitments and the like. We evaluate such factors, among others, and do not assign
any particular weight or priority to any of these factors. We consider each individual candidate in the
context of the current perceived needs of the Board as a whole. While we have not established specific
minimum qualifications for director candidates, we believe that candidates and nominees must reflect a
Board that is comprised of directors (i) a majority of whom are independent; (ii) who are of high
integrity; (iii) who have qualifications that will increase the overall effectiveness of the Board; and
(iv) who meet other requirements as may be required by applicable rules, such as financial literacy or
financial expertise with respect to Audit and Finance Committee members;
• In evaluating and identifying candidates, we have the sole authority to retain and terminate any third party
search firm that is used to identify director candidates and the sole authority to approve the fees and
retention terms of any search firm;
• After such review and consideration, we select, or recommend that the Board select, the slate of director
nominees; and
• We endeavor to notify, or cause to be notified, all director candidates of the decision as to whether to
nominate such individual for election to the Board.
There are no differences in the manner in which the Nominations and Corporate Governance Committee
evaluates nominees for director based on whether the nominee is recommended by a shareholder, management or
a search firm.
How did we perform our responsibilities in fiscal 2006?
The Nominations and Corporate Governance Committee held a total of six meetings during fiscal 2006, and we
took the following actions, among other things:
• Reviewed and discussed with company management applicable changes in corporate governance
requirements under federal and state securities laws and the NYSE listing standards, as well as the
company’s compliance with such requirements;
• Evaluated potential candidates to serve as new independent members of the company’s Board;
• Evaluated the composition of and recommended assignments for the committees of the Board;
• Considered and recommended to the Board the submission to shareholders of the director nominees
described in this Proxy Statement; and
• Reviewed and evaluated the performance of the company’s Chief Executive Officer.
Who prepared this report?
Members of the Nominations and Corporate Governance Committee, Michael R. Lynch, Sanjiv Ahuja,
Adrian D.P. Bellamy and David B. Zenoff, prepared this report.
Audit and Finance Committee Report
Who serves on the Audit and Finance Committee?
The Audit and Finance Committee consisted of Adrian T. Dillon, Jeanne P. Jackson and Michael R. Lynch from
January 30, 2006 to October 30, 2006. Ms. Jackson resigned from the Audit and Finance Committee on
October 30, 2006, and Richard T. Robertson was appointed to the Audit and Finance Committee on
November 15, 2006. Mr. Dillon qualifies as a “financial expert” under the SEC rules and served as Chairman of
the Audit and Finance Committee during fiscal 2006. The Board has determined that each member of the Audit
and Finance Committee is independent under the NYSE rules, as currently in effect, and Rule 10A-3 of the
Securities Exchange Act of 1934, as amended. The Board has also determined that each Audit and Finance
Committee member is “financially literate,” as described in the NYSE rules.
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